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Blog — 20 Sep, 2021
By Ian Campbell, Alex Cook, Eric Hanselman, Kelly Morgan, Chris Rogers, and Jason Sappor
Battery technology cost declines have opened new use cases for energy storage. According to S&P Global Market Intelligence, stand-alone battery storage costs are estimated to shrink to a point where storage can compete head-to-head in the resource adequacy market, while optimizing intermittent generation. With the booming electric vehicle (EV) market and uptick in battery storage solutions, is the global supply chain ready to keep pace with multiple sectors? What are the projections for battery storage being used on the power grid? These and other questions were addressed in the U.S. Battery Storage and Global Battery Metals Trends webinar held in July 2021. This blog summarizes some of the key discussion points.
Presenters from S&P Global Market Intelligence:
Ian Campbell (Moderator), Senior Product Manager, Energy
Alex Cook, Senior Analyst, Energy Research
Eric Hanselman, Principal Research Analyst, 451 Research
Kelly Morgan, Research Director, 451 Research
Chris Rogers, Senior Lead Supply Chain Analyst, Panjiva Supply Chain Intelligence
Jason Sappor Commodity Analyst, Metals and Mining Research Team
Questions and Answers:
Q: What alternatives to lithium technology could likely gain traction in the coming years?
Alex Cook: Lithium-ion satisfies the need for intra-day storage of energy, shifting net load around to compensate for the intermittency of renewables. There's going to be an increased need for multi-day energy storage, which is mostly provided on the grid by pumped storage where water is put into a reservoir and released at a later time in order to generate electricity through turbines. The limitations of that are its environmental impacts and cost, plus the fact that the topology has to be ideal for it to be implemented.
Some of the emerging options that would satisfy the need for multi-day energy storage to complement lithium ion include iron air. A start-up announced that it’s developing an iron-air battery that could provide approximately 150 hours of energy storage, which would satisfy demand at a lower cost than lithium ion per unit of electricity. That's important for it to be commercially viable as we push towards decarbonization.
Green hydrogen is also worth mentioning. This takes renewable energy that's in excess at certain times of the day to run an electrolyzer to create hydrogen and then store that to burn in turbines to generate electricity at a later time. Infrastructure requirements are notable, but it’s definitely an option going forward for long-duration energy storage.
Q: What other battery metals could potentially be impacted by new battery technology innovations now and in the future?
Jason Sappor: Most of the recent technology innovations are around cost reduction. Given that cobalt trades around 2.5x higher than nickel on the London Metal Exchange, decreasing cobalt content in these batteries and increasing nickel content is becoming a trend. This has given rise to higher nickel-containing battery chemistries, such as NMC811 cathodes, which are eight parts nickel and one part cobalt. We see cobalt facing larger downside risks due to these technology, but other emerging technologies could change these dynamics.
Q: Any thoughts on the maximum capacity of iron-air power storage, although it’s early stage?
Alex Cook: It’s a pretty modular solution. One of the selling points of lithium-ion batteries is that they can be sized to be quite large, and I believe an iron-air battery would be the same. In fact, if it's available at a lower cost, then it could be built up in that modular way, depending on the needs of the grid. You only need so much storage, but it could definitely be more economical in the long run.
In our modeling work, it's clear that even before you get to 80% renewable energy, the level of renewable energy overbuild and lithium-ion capacity that's needed to balance the grid is huge. The iron-air technology could alleviate the need for some of that excess capacity.
Q: Any thoughts on the time frame to which non-lithium-ion chemistry-type batteries might become competitive, and for what lengths of storage duration?
Alex Cook: I would say 2025. It has to be there by 2030 or before for decarbonization. There is another issue about energy intensity in battery production. Emerging technologies fall into two buckets: (1) those that are designed to meet the needs of transportation, like a solid-state battery that doesn’t take up much space in the vehicle, and (2) some of the zinc-chemistry batteries and the experimentation that's going on with different electrolytes. The flow batteries and iron-air batteries are not intended to be in a vehicle. They're purpose-built for a large-scale modular installation on the grid in order to meet the need for long-duration energy storage.
Eric Hanselman: The other side of energy intensity is the reusability of batteries. The value of the various components of a battery are one of the things that determines its recyclability. Reusability is the counter to that, which enables us to take already formed manufactured batteries and put them to new use. Many EV batteries come in packaged forms that are directly reusable, like the Nissan LEAF battery. With Tesla, on the other hand, it’s a set of individual battery cells that are bound together in a large pack that have to be disassembled to be reused. In both cases, however, the main challenge for reusability is the ability to test and certify those individual battery packs or cells. That's where advancements are taking place in terms of ensuring that we can rapidly and inexpensively test those battery cells and put them back to use.
Chris Rogers: The issue of recyclability or reusability becomes very complex from a logistics perspective. You can return a Nissan LEAF or Tesla battery to the garage and they handle it, but the different automakers have different form factors for their batteries. That may require some regulation around reusability and recyclability, which raises the issue of whether or not there will be a global standard. Waste management supply chains more broadly are dependent on national-level regulations, and those can change significantly. Companies aren't going to invest unless they know what the regulatory environment will look like.
Q: There are going to be barriers to long-term battery storage adoption and things getting underway by 2030. What might be the largest barrier?
Chris Rogers: The largest barrier is who is going to pay for it. Also, from a supply chain perspective, government policy is important. We're seeing a lot of governments say there is a once-in-a-generation opportunity to grab EV manufacturing and the whole battery supply chain. So, what government incentives are going to be put in place? When you have state-run companies like in China, you know who's going to pay. In the U.S., the Biden administration has already concluded that it should promote manufacturing of large-capacity batteries in the U.S. That means we need to incentivize the entire supply chain, including the purchasing of EVs and installation of charging grids. Government support is on the agenda in all major countries, and who will pay is the biggest barrier ‒ or enabler − of developing battery storage systems.
Q: Will there be any stand-alone energy storage tax credits or other policies that you think might have large impacts on adoption or represent another barrier/enabler on the U.S. side?
Alex Cook: An investment tax credit that could be applied to stand-alone energy storage systems would make them more economical. Currently, that's only available to utility -scale energy storage projects if they are paired with solar and charged exclusively from the solar. That is somewhat of a limiting factor as far as the ability to put power back on the grid.
Earlier this year, there was the Energy Storage Tax Incentive and Deployment Act (introduced but not yet passed) that would extend tax credits to stand-alone energy storage systems for commercial and utility-scale projects. The roughly $1 trillion Investment and Jobs Act has some support for EV charging stations and infrastructure, but I haven't seen anything that would extend the investment tax credit to energy storage that's a stand-alone system. If the larger $3 trillion-plus infrastructure bill passes at a later time, it could potentially include an investment tax credit for stand-alone energy storage and for a national clean energy standard, which would push us towards deeper decarbonization, implicitly supporting lithium- ion energy storage and emerging long-duration technologies.
Q: Would projected data center capacity also cover the expected enormous bitcoin mining demand?
Kelly Morgan: We have a specialist working on the bitcoin angle to all of this, given the growing interest. Our numbers right now include a certain amount of bitcoin, but not all of it. They don't typically take batteries, so we may not include them when we're looking at battery capacity required going forward. That might change on the bitcoin mine side, as they may start to use more backup options.
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